Sport has not traditionally seen the need for disciplined business models. So there has generally been very little use of data or insight-driven thinking. Happily, the times are finally changing.
While customer loyalty has been easily gained, improvements in management and governance of sporting organisations themselves have been at best gradual. Tradition and sentiment have tended to take precedence over evidence and innovation in decision making.
During the frenetic and sometimes chaotic growth of many sports, some areas of the business were largely ignored. The variety of new, high-level funding sources from outside investors, television and the corporate world reduced for a while the need to concentrate on some of the fundamentals which enable most companies to succeed sustainably.
One of these was the use of data and CRM. Sporting businesses remained at SME levels of revenue, but with FTSE levels of customer data. This made engaging with the questions posed by CRM unnecessarily complex. The supplier base of sports data agencies also lacked neutrality.
The result was an uneasy stand-off. The good news is things have changed significantly in recent times. Here are some of the principle reasons.
Higher-quality talent client-side. The new sporting CEO tends to come with a change agenda predicated on sustainable profitability and customer engagement. This type of person understands that customer insight and measurement is a fundamental driver of business strategy.
Significantly lower cost of entry. New, high-quality technology enables much more to be achieved with those SME budgets. The plethora of data sources can indeed be wrestled into shape.
Customer demands. Expectations increase through the higher quality engagement customers receive from other sectors, such as theatre and music. Added to the lower disposable income of sports fans and you create a much more challenging and demanding consumer.
Challenges of new customer acquisition. Certain sports cannot grow through increasing customer market share. West Ham cannot easily pinch fans from Arsenal, at least not domestically. So they need to work harder with their existing fans.
In the next 12 months, sports will necessarily become even more accountable as businesses - decision making will be based on evidence, not instinct. The customer-facing, sporting CEO will be just as interested in understanding customer churn as on-pitch tactics.
Secondly, the shape of the sports market will change significantly. Successful ticket providers will be those that become far more customer-orientated. Sponsorship deals based on media value alone will be less prevalent. Instead, they will be traded and paid contingent on measurable customer value return.
Thirdly, “mass” products will become a thing of the past. We will become used to 500,000 different versions of a season ticket, membership or television exposure, with technology the enabler. This will impact the entire business model of sport.
Fourthly, sport will start to prize real talent off the pitch as well as on it - quality thinking will be valued. It’s already happening – the London 2012 commercial team was mostly hired from outside sport. Two Circles’ latest five hires come from dunnhumby, BP, Accenture, London 2012 and Arcelor Mittal.
Finally, we will be gathering more insight about how many people are really playing and engaging with sport in this country. We will understand how quality physical education reduces obesity and NHS bills. We will genuinely be able to drive positive change through sport.
Conditions in the sport and leisure industry were never set up to embrace data-driven customer-centricity. As data-driven thinking pushes sport kicking and screaming into the brave new world, the next 12 months will break some pivotal new ground. Watch this space - the revolution will be digitised.